Decoding ‘Merchant of Record’: How Tebex Redefines Payment Risk in Gaming
For game studios weighing who should legally own payments, tax, and disputes, and why that decision now lands on your balance sheet.
Key Takeaways
- Platforms like Google are pushing more payment risk onto developers. An MoR shifts that risk back off the studio.
- Using Tebex as Merchant of Record shifts payment risk - chargebacks, tax, disputes - off the studio's balance sheet and onto Tebex’s.
- Studios don't need their own payment accounts or dispute processes; Tebex handles both as the legal seller.
- Tebex supports 130+ local payment methods, for both webstores and in-game purchases.
A player disputes a $5 in-game purchase. The studio loses the sale, loses the item it already handed over, pays a chargeback fee, and pays a processing fee - over five dollars. Multiply that by many disputes a month across a dozen countries, and "checkout" stops being background plumbing and starts being a line item.
That's the shift underway right now, driven largely by Google’s recent policy overhauls. Under pressure to allow alternative billing systems and external webstores, Google has opened the door for developers to use third-party processors - but there is a catch. By stepping away from the transaction, Google is also stepping away from the liability.
The tech giant is pushing the massive burden of global tax compliance, local regulations, and fraud mitigation directly onto developers. Someone has to hold that risk—the studio, or a payment partner built to absorb it. Merchant of Record is the answer to that question, and it's worth understanding before a tax notice or a wave of disputes forces the issue.
What Does "Merchant of Record" Mean for a Game Studio?
Whenever a payment occurs, there must be an official seller on record. That's where the Merchant of Record comes in: they are the middleman between the seller and buyer. They process the payment, send tax to the government, follow legal rules, and handle refunds or disputes.
A Merchant of Record's real value is not in building a nicer checkout page, it's in changing who's legally and financially on the hook.
Gaming makes this messier because studios sell lots of small things: in-game items, DLC, subscriptions, and "season passes" (bundles of rewards unlocked over time). Each purchase can trigger a tax issue or dispute, often in a different country. Because each one is small, it's easy to forget the studio is still responsible - until it adds up.
How Does Tebex's Model Reduce Payment Risk?
A "chargeback" is when a player disputes a purchase with their bank and asks for a refund. It's not just a lost sale. The studio also loses the item it gave the player, pays a processing fee, pays a dispute fee, and spends staff time sorting it out. Occasionally, that's just annoying. At scale, it eats into profit.
This is what Tebex, as Merchant of Record, is built to handle: fraud checks, chargebacks, and tax collection, instead of the studio doing it. Studios also skip setting up their own PayPal or Stripe account.
Payment method choice matters too. Tebex supports 130+ local payment methods across webstores and in-game purchases, because players in different regions spend differently and prefer different ways to pay.
North Americans spend around $325 a year on games versus about $125 in Europe, per a joint Newzoo and Tebex study. In plain terms: a payment method you don't offer is often a sale you never see.
None of this guarantees more revenue. It makes the trade-off clear: the right payment methods help capture sales, and Tebex as Merchant of Record moves the back-office risk off the studio's books.
Studio vs. Merchant of Record: Who Handles What?
Same sales. Different party carrying the risk.
What Should Studios Do About This?
The question isn't whether working with an MoR means losing control - it's which parts of the business are worth controlling directly.
Keep control over pricing, what you sell, and the player relationship. Worry less about tax registration, dispute handling, and reconciliation - the back-office work an MoR is built to absorb.
Start by checking your exposure: how many countries you sell in, your monthly dispute volume, and the staff hours spent cleaning up payment problems. Then compare the payment methods you offer against where your players actually are - the North America/Europe spending gap is a reminder that preference varies by region. Finally, route everything (items, subscriptions, passes, DLC) through one Merchant of Record checkout.
Who Should Hold Payment Risk for Your Studio?
This shift isn't a passing trend - platforms are pushing more risk onto developers, and it has to sit somewhere. If a chargeback, tax bill, or failed payment lands on your team instead of your payment partner's, you're already taking on the operational responsibility of being the Merchant of Record.
The only question is whether that was your choice.
FAQ
What is a merchant of record for a game studio?
The company that's legally the seller - responsible for payments, tax, refunds, and disputes. Tebex is an MoR built for game studios, taking on that role and its risk.
How does Tebex handle chargebacks and sales tax?
Tebex disputes chargebacks and collects and pays sales tax across every market it sells in. The studio still sells to players; it just isn't the one doing the paperwork.
Can Tebex be built into a game or website's checkout?
Yes, through Tebex.js (websites) and Tebex checkout (in-game and webstore). The buying experience stays inside the game or site, while Tebex carries the legal responsibility behind the scenes.
Does Tebex support subscriptions, season passes, and DLC?
Yes - all go through one checkout, since each carries its own billing logic and dispute risk. One system, one company holding the risk.
Is Tebex good for selling games internationally?
Yes - with 130+ local payment methods matter since spending and preferences vary by region ($325/year in North America vs. $125/year in Europe). Not offering a payment method a player wants is a sale you never see.
